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Donations Through a Holding Company

Use your holding company to get more value from your gift.


Who is this type of giving for?

Owners of holding companies that generate sufficient earnings to leverage the corresponding tax benefits.


Donor benefits

  • Receipt for the fair market value of donated securities or a death benefit.
  • Gift of securities: No capital gains tax.
  • Balance of the capital dividend account (CDA) increased by an amount corresponding to the capital gain so the shareholder can withdraw the equivalent of this capital gain on a tax-free basis.
  • Death benefit from a life insurance policy: Low cost for a considerable donation and possibility of amending clauses in the will during the donor’s lifetime.

Additional information

A holding company can be a tax-efficient solution for managing your donation strategy.

Your holding company has a capital dividend account (CDA), which allows it to pay tax-free dividends to shareholders.

The CDA balance includes the non-taxable portion of capital gains following the disposal of shares and life insurance proceeds over and above the adjusted cost basis of the policy.

Since 2006, capital gains following a gift of publicly traded securities have been tax-exempt. By donating securities by way of the holding company, you can therefore add an amount equal to the non-taxable portion of the capital gain to the CDA.

Eligible securities include shares, bonds, mutual fund units and other securities listed on a Canadian, U.S. or international exchange.

This amount will be payable to shareholders, free of personal income tax if, prior to the dividend payout, the proper tax-related choices have been submitted in the prescribed manner.

If you plan to gift the death benefit arising from a life insurance policy, it may also be worth looking into the possibility of putting the policy in the holding company’s name.

The HEC Montréal Foundation does not provide financial or legal advice. The examples used here are for illustrative purposes only. Please consult your financial or legal advisor to ensure that the selected donation option takes into account your specific circumstances as well as all applicable legal and tax implications.

Questions about planned giving?

Contact :

Mireille Lafond

Mireille Lafond HEC 1979
Director - Major and Planned Gifts

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